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Should Electric Share Cars Be Exempt from Congestion Fees? Gothenburg Says No.

Danish company GreenMobility has stated that efforts to convince local politicians in Gothenburg to exempt share cars from the city congestion tax has been unsuccessful.   

On September 27, GreenMobility notified users of their free-floating car-sharing service via email (as well as through a message on their app) that they will have to start passing on the city’s congestion fees to their customers – effective the next day.

Up until that point, the company had been absorbing the fees on their customers’ behalf in order to create a simple and complete service. This was done in the hope that their negotiations with local politicians would bear fruit, and that their “green and shareable cars” which they claim in fact helps to contribute to less congestion in the city, would one day be exempt from the tax. However, “despite a close and long dialogue with the local politicians, we will have to continue paying the taxes”, the email stated.

GreenMobility is a Danish listed car-sharing service that currently operates in 8 European cities with its headquarters in Copenhagen. The cities of operation cover Sweden (Gothenburg, Malmö), Denmark (Copenhagen, Aarhus), Finland (Helsinki) and Belgium (Brussels, Antwerp, Ghent). Apart from Gothenburg, none of the other cities GreenMobility operates in currently have congestion charges – although all of the Danish and Belgian cities have low-emissions zones from which GreenMobility’s all-electric fleet are exempt. However, the regional government in Brussels appear to be considering a congestion charge as well but it’s not clear at this stage which vehicles would be covered or exempt.

GreenMobility also has plans to re-enter the Norwegian market of Oslo in the near future. Oslo has a toll-ring which combines both elements of a congestion charge and a low-emissions zone, without stating in name whether the purpose is primarily congestion or pollution related. It does this by applying a discounted rate for pure-electric passenger vehicles compared to ICE or hybrid (including plug-in) vehicles. Electric trucks are currently fully exempt.

Personal Comment:

This announcement from GreenMobility (who we’ve covered previously in a deep dive on free-floating car sharing) about the city of Gothenburg’s approach to electric and shared cars through the policy instrument of congestion charges brings about a couple of really interesting topics of discussion:

  1. Should we appropriate instruments designed to curb congestion for the purpose of encouraging electrification?  
  2. Do share-cars actually help reduce congestion, and if so should they be exempt from congestion taxes (at least initially) to encourage their adoption?

On the former, it appears that officials in Norway have at least had no qualms in being a bit flexible with their policy instruments for the purpose of encouraging electric vehicle uptake. From as early as 2005 electric cars were given the nation-wide right to drive in bus lanes (a perk that was ended ten years later in 2015) and a large number of Norwegian municipalities started offering free or discounted parking in sought after areas for EVs. Seen against this light, appropriating a toll system setup for the purpose of reducing congestion to encourage EVs (or car sharing) doesn’t seem that bad at least in principle. However, the level of electric vehicle uptake in Sweden today is already much further along than it was in Norway in 2015.

The second topic is then perhaps even more interesting. There appears to be at least some peer-reviewed evidence behind GreenMobility’s claim that they (or rather, other free-floating car sharing services like them) actually reduce congestion. An important paper was released in November 2020 that examined data provided by car sharing service SHARE NOW in European cities. The paper found that the availability of these services reduced the number of cars in all cities examined and that this was statistically significant. On average between 2.1 and 5.3 users per share-car indicate having sold a car since they began using the service. In addition, a number of cities reported high values for the number of suppressed car purchases, with Copenhagen showing that each share car led to 18.6 suppressed car purchases, London 13.3 suppressed purchases and Vienna 7.7. Of course, more studies of this sort will be needed. But if these results are to be taken at face value, then it could present a strong policy argument that maybe congestion taxes should not apply to shared-car services after all.

I imagine that this debate between GreenMobility and Gothenburg’s politicians could just be the first of many rounds between the growing car sharing industry and city authorities.

Written by Bobby Chen,
RISE Mobility & Systems (Elektromobilitet)